Related: What is the difference between sauce and dressing. That was closed as general reference, which means for consistency this ought to be closed, too; however, I think both questions hit on areas of language where inconsistencies and multiple incompatible meanings abound. (IOW, perhaps the older question ought to be reopened.)
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MarthaªOct 25 '12 at 15:21

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@FumbleFingers, that's asking about the (mis)use of "gravy" to mean "tomato sauce", which is a practice that's peculiar to a specific segment of Italian immigrants to the USA. While it's an interesting footnote, it's hardly definitive with regard to the usual uses of the words "sauce" and "gravy".
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MarthaªOct 25 '12 at 17:52

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Gah! Ok, @Reg, explain how this is a duplicate. Please.
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MarthaªOct 25 '12 at 18:00

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@Martha: you are absolutely welcome to edit the question into shape such that it builds on that other question or whatever. In its current form, it's a one-liner that simply wouldn't exist had Szczepan searched this site for gravy. Or looked it up in Merriam-Webster.
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RegDwigнt♦Oct 25 '12 at 18:20

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The fat and juices which exude from flesh during and after the process of cooking; a dressing for meat or vegetables made from these with the addition of condiments.

Whereas sauce is:

Any preparation, usually liquid or soft, and often consisting of several ingredients, intended to be eaten as an appetizing accompaniment to some article of food.

In other words, sauce is the more general of the two terms. Furthermore, gravy is usually hot, whereas sauce can also be cold.

Finally, with the rise of vegetarian meal options, you now hear qualified versions like mushroom gravy, which is made of mushrooms not out of simmered flesh-juices, to be served hot over mashed potatoes and the like. In other words, to be used for the same thing as meat gravy is used, but not made from animal flesh.

Note also that while a raspberry sauce can be expected to be made of raspberries, that cranberry sauce is a relish made from cranberries, not something to be spread atop cranberries. Things like Hollandaise sauce are something else again.

There are also extended, transferred, and metaphoric meanings of both these words, such gravy train, stewing in one’s own gravy, and in the old proverb that what is sauce for the goose is sauce for the gander, as well as saying that someone has a saucy mouth, or that they have too much sauce meaning that they are impertinent. Sometimes, too, sauce can mean booze, at least in slang.

In Italian-American slang, gravy also means tomato sauce with spices served on pasta.
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RobustoOct 25 '12 at 15:13

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I think the OED definitions made the distinction rather well. Everything else here is just gravy ;^) On a more serious note, some culinarians will categorize sauces into one of the basic 5 sauces (sometimes called the five "mother sauces").
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J.R.Oct 25 '12 at 16:02